Wednesday, February 23, 2011 (DAY 6 of Course)
We start on the road early today, at 7:15 AM because our first visit is to a manufacturing firm China Precision Technology, in Cixi, Zhejiang Province, about one and one-half hour from Shanghai. The company’s primary product is content for consumer electronics, such as tuners for TVs and connections for cable modems and DVD players. The company also produces materials for mobile phones and logos for car companies. 80 % of the firm’s revenues come from Fortune 500 companies.
As we travel, Dr. Basu lectures on economic issues, including currency, consumption, trade imbalances and inflation. He talks about the differences in savings rates between China and the west and what might be done differently by each as we look toward the next 20, 30 or 50
En route we pass over the world’s longest sea bridge, the Hangzhou Bridge, which spans 36 km (21.6 miles) across the Hangzhou Bay north of Shanghai.
This firm is a true manufacturing firm. As we enter the property, our bus is saluted by uniformed security guards at the main gate. We disembark at the main entry and are escorted into a conference room for an overview of the company, its history, locations and revenue. The company, through entering into new products, and buying a company in Japan expects a 50% increase in revenue for 2011 over 2010, and foresees the same growth rate continuing for the next 3 years or so.
We are taken on a tour of the facility and see that this is essentially a traditional manufacturing
operation, with tool and die, press and fabrication. There is no special robotics or amazing automation. The primary advantage here is plentiful, low-cost labor. The shops employ nearly 2000 employees, average age 23 and 70% female.
Our host explains that average income if 2000 RMB (about $305) per month. According to China Daily, migrant, unskilled labor usually earns 1200 RMB per month (about $183) and recent college graduates earn 1500 RMB (about $227) month, so this statement may be an overstatement, or might reflect the higher wage level expected in Eastern China where living expenses are higher.
We are shown a dormitory that we are told the company spent 30 million RMB to construct (about $4.4 million). A dorm room on the second floor is shown to us that is decorated with posters, has three beds and has a cable internet modem. A quick survey of the building
arrangement shows 6 floors of living space in 3 buildings, each floor with 20 rooms per floor. That comes to 360 rooms. If even just three-fourths of the 2000 employees live in the dormitory, that means they would have to have at least 4 people per room.
Our group comment among ourselves on the way back from lunch in the dormitory area that the facility is in generally poor condition and has obviously been recently hosed down. Employees all are wearing blue uniform and many show recent makeovers (hair style, makeup, new jeans). We think we are being shown an atypical scenario.
The ride to our next company visit, back in Shanghai, takes nearly two hours. The day is much warmer today and we encounter severe traffic in Shanghai, making us very late to our appointment. This
is a terrible breach of protocol, where guests should expect to be from 5 to 15 minutes early to an appointment. Our hosts are kind and meet with us anyway.
The firm is Yuexing Group, Ltd., one of the top 500 enterprises in China. Begun in 1988 as a small shop manufacturing furniture, the firm has grown to a vertically integrated manufacturer and retail seller of high end furniture, which also supplies many five-star hotels. The company has diversified to other enterprises as well. 2010 revenue was 10 billion RMB (about $1.54 billion) and employs a staff of 7000.
The firm’s principal, Ding Zuohong, is very well connected to the Communist Party of China (CPC) and is shown with a number of key dignitaries. His many altruistic ventures are recounted in the firm’s presentation as well.
the facility and are suitable impressed by the many display rooms and rich dark woods and plush fabrics. This is clearly a company that has capitalized upon the opportunities presented by China being opened to trade with the rest of the world.
We depart this location for a special dinner as the guests of Dr. Wenyan Lee. Dr. Lee is an associate of Mr. Longping Sun, our host of Monday evening. Dr. Lee has made reservations for us at a special buffet restaurant.
En route I chat with my roommate, Yifan. He can tell many of our group is affected by this morning’s visit. I admit that some probably were, but I offer the opinion that this particular factory and dormitory are probably better than many, particularly those in other areas of China. I explain that we struggle with a desire to see people live in
better conditions than what we saw, but we also recognize the jobs these young people have now are probably better than what was available to them ten years ago and offer a path to a better life.
The conditions we see are not a reflection of an evil manufacturer exploiting young, uneducated workers but are a consequence of my country’s demand for increasingly cheap goods. The onus is on American consumers, American brands and the suppliers they engage to constantly seek to improve conditions for the producers of these goods.
To the company’s credit, they are seeking to develop an approach to social responsibility. Our host at the firm, Dr. Li, commented that he would be attending training in Sweden shortly on how to incorporate those values into the firm’s operations.
This is a not a neat and tidy conclusion to a troublesome issue, but an encounter with the reality of our world’s manufacturing environment today.
Continuing our time constraints, we take a wrong turn off the freeway and, by
the time we make a u-turn and head in the correct direction, are now stuck in evening rush hour traffic and are still 20 minutes from the restaurant. The venue is very restrictive, allowing guests to arrive only within 15 minutes of the scheduled reservation. We are close at 6:00 PM, so Dr. Lee and Yifan exit our shuttle bus to dash across traffic and make it prior to out reservation expiration.
This restaurant is like no buffet you have ever seen! The restaurant is 300,000 square feet and can accommodate 4000 diners. Our reservation has us seated in the center of the room, directly in front of the stage where a female vocalist performs with a 3-piece band.
The buffet extends on both sides of the stage and had every imaginable Chinese dish. Fresh fish, duck, goose, beef, fried food, baked food, raw
food. Vegetables, fruit, desserts. I’m frustrated to learn that smoking is allowed at the tables, but make the best of it…I won’t let it interfere with my appetite, that’s for sure.
The traditionally unfailingly polite Chinese appear to have stayed home this evening (our company and host excepted). Our group is bumped, ignored, cut in front of and in one case the object of cat calls. This didn’t disturb our time too much as we find our way to all of the various islands for food and beverage.
Part of our group returns to the hotel at about 8:15 PM while some remain behind to drink a bit more and burst into spontaneous Karaoke to John Denver’s “Take Me Home, Country Road”. The only problem: it’s not a Karaoke bar.